JAKARTA (TheInsiderStories) - Indonesia’s central bank Bank Indonesia governor Agus DW Martowardojo assessed that Moody’s Investors Service’s ratings affirmation is a recognition of the strength of Indonesia’s economy in the face of economic downturn and global financial volatility.
On Jan.28, Moody’s has affirmed Indonesia’s Sovereign Credit Rating at investment grade level.
Moody’s had previously affirmed the Sovereign Credit Rating Indonesia at Baa3/stable outlook on January 18, 2012.
“Moody’s affirmation reiterated recognition of the strength of the Indonesian economy in navigating through the global economic downturn and financial market volatility. The balance between monetary and fiscal policy, as well as continuous structural reforms have become the authority’s key success factors to promote strong and sustainable economic growth,” he said in a press statement released on Friday.
Looking ahead, Agus said, there are a number of conditions that allow Moody’s to hoist higher ranking Indonesia. First, the increase in government revenues, driven by the diversification of income sources. Secondly, the narrowing of the current account deficit and inflation. Third, progress dealing with infrastructure and regulatory bottlenecks. Fourth, the deepening of local capital and market debt securities, thereby reducing the government’s dependence on foreign loans.
Aside from Moody’s, Indonesia also already holds an investment grade rating from Fitch Ratings. In January 2012, the international rating agency is pinning BBB- with a stable outlook to Indonesia. This is the first investment grade rating from Fitch Indonesia within the last 14 years.
While, Finance Minister Bambang Brodjonegoro added, Moody’s assessment shows that Indonesia is becoming a safe heaven country across emerging countries and give more confidence to the investors to put more fund in Indonesia.
Currently, other rating agency like Standard & Poor’s still put Indonesia below investment grade level to BB +. In May last year, the rating agency has actually boosted the prospects of Indonesia’s rating from “Stable” to “Positive”. By doing so, opens the possibility for the S & P raised the rating to a decent level of investment in the next 12 months since May 2015.
In its press release, Moody’s affirmed Sovereign Credit Rating of the Republic of Indonesia at Baa3/stable outlook.
The key factors that support affirmative decision for Indonesia’s sovereign credit rating are the government’s strong balance sheet against the current backdrop of widening fiscal deficit and effective Indonesia’s policy response to mitigate external risks from lower commodity prices and weaker growth to ensure the sustainability of Indonesia’s external payments position.
Moreover, the stable outlook reflects that Indonesia remains resilient to current pressure from lower commodity prices and international financial volatility. Although external pressure on Indonesia’s economy persists, its growth remains higher than similarly rated peers. (*)